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Changes In Supreme Court Precedents On Whether Finalized U.S. Judgments Can Be Executed In Korea

I would like to introduce the Korean Supreme Court precedent on an important issue that was recently discussed in the cross-border case we took over.

To briefly introduce the case, a U.S. company was seeking to file a claim for a payment against a Korean company in a U.S. court. However, since all the Korean company's assets are in Korea, if the U.S. court's judgment is finalized in the future, they must go to Korea to execute the judgment.

Here, the importance of execution cannot be overemphasized. The final stage of any dispute is execution, not a finalized court decision. If you cannot actually execute the judgment after receiving it, or if there is nothing to be executed, the judgment will be just a piece of paper. In particular, the important things to consider in relation to the execution of foreign judgments in Korea are (1) whether foreign judgment procedures have been carried out to satisfy the execution requirements, and (2) securing the property to be executed in advance.

As a result, if the case is a judgment of a U.S. court that must be executed in Korea, it will have to be rendered in a U.S. court so that it can be executed in Korea. Therefore, this means that the content of the judgment as well as the procedure must meet the execution requirements in Korea. The execution requirements in Korea are stipulated in detail in Article 217 of the Korean Civil Procedure Act, and there are many Supreme Court precedents on specific cases.

Among the execution requirements, there is a lawful service requirement of a foreign judgment in relation to whether the “opportunity” to participate in the foreign judgment is sufficiently guaranteed to ensure the right of defense of the other party (defendant). For example, if a lawsuit is filed in a California State court in the U.S., and the defendant is in Korea, even if the defendant did not participate in the trial, the defendant must be served legally, providing sufficient opportunity to participate in the trial.

Specifically, according to the Korean Civil Procedure Act, “That a defeated defendant is served, by a lawful method, a written complaint or document corresponding thereto, and notification of date or written order allowing him/her sufficient time to defend (excluding cases of service by public notice or similar), or that he/she responds to the lawsuit even without having been served such documents;” (Korean Civil Procedure Act, Article 217, Provision 1, Item 2)

In this regard, the Korean Supreme Court previously considered that the term “similar” as used here included Supplementary service or Service by mail, and ruled that foreign judgments based on Supplementary service were not able to be executed in Korea. Supplementary service as used herein refers to a service method in which a document is delivered to a person who has the intelligence to discern self-interest as an employee or cohabitant because the person to be served (defendant) cannot be met. In the sense that the judgments of Korean courts can be executed even in the case of supplementary service, the previous Supreme Court precedents strictly interpret the execution requirements of foreign judgments and make their execution difficult.

However, at the end of last year, the Supreme Court decided en banc to discard the previous interpretation on the term “similar”. If the foreign judgment is delivered by Supplementary service and the Supplementary service was performed legally with sufficient time for the defendant to exercise his right of defense, it should be considered as having been served by lawful service. (Supreme Court of Korea, December 23, 2021, 2017Da257746).

There are some cases where parties (defendants and debtors) who reside in Korea and whose property is located in Korea do not participate in the proceedings in the U.S. courts. In this case, the U.S. court's judgment could not be executed in Korea due to the limited service method according to the previous Supreme Court precedent, or additional time and money were required to prove the lawful service. However, with the change of the Supreme Court precedent, it appears that the possibility that the final judgment of the U.S. court can be executed in Korea may increase.

As mentioned above, if you are preparing for a lawsuit in the U.S. court to be executed in Korea in the future, from the beginning, it is necessary to carefully review and plan from the perspective of Korean law and Korean litigation procedures whether it is possible to execute the judgment of the U.S. court in Korea, and how to lead the court process in Korea. It is also important to plan in terms of whether there is any property to be executed, and how to preserve the property so that it can be executed in the future, etc. Otherwise, a time-consuming and expensive lawsuit in the U.S. court that ends in a successful final judgment may unfortunately be unable to be executed in Korea.

In these cases, a Korean law lawyer is necessary even in a U.S. court lawsuit. We, K-Law Consulting and Korean law lawyer Jinhee Lee, will be thoroughly prepared to help you. If you have a dispute with a Korean company or expect you may have a dispute in the future, please feel free to contact us at any time. Thank you

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